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At around £7,600 per
year of study, this is slightly more than
the £6,000 on average that the government spent on each secondary school
pupil in 2012/13, the IFS said.

However, future rises in fees or student numbers would increase the long-term costs further.

A £500 hike in fees – from the average £8,600 estimated for the 2012 intake – could raise the public cost of student loans to the same as under the old system, and researchers said larger rises could make the new system millions of pounds more expensive.

Gleaming spires: The city of Oxford, home to one of the most famous universities in the world. Even though elite universities now charge three times more for their degrees, the cost to the taxpayer may be very similar

Changes to the cap on student numbers, which allow in an extra 60,000 a year, could cost an additional £1.7billion in loans.

The IFS suggested the government could
cut the loan subsidy under the new system by increasing the repayment
rate, reducing the level of which students pay back the money or
extending the repayment period.

IFS
senior research economist and report author, Rowena Crawford, said:
‘The government’s changes to the higher education finance system have
not reduced the total taxpayer contribution per student substantially.

'The
net effect on the public finances is primarily an increase in
uncertainty, with the certain cost of teaching grants replaced by the
uncertain costs of providing student loans'

- Report author Rowena Crawford

‘The
net effect on the public finances is primarily an increase in
uncertainty, with the certain cost of teaching grants replaced by the
uncertain costs of providing student loans.

Her
colleague, research economist, Wenchao Jin, added: ‘Whether these
reforms have reduced the taxpayer subsidy will remain unknown for many
years to come.’

As the
research was published, vice chancellors’ group Universities UK
announced it is setting up a new panel to look at the student fees and
loans system in England.

It will analyse the IFS findings and look at how the cost of providing tuition fee and maintenance loans can be reduced.

Meanwhile
the Higher Education Policy Institute today published two reports,
comparing the English and Australian higher education systems. One
concluded that Australian graduates ‘pay back their loans more quickly
thanks to lower debt levels and a better-designed repayment system’.

A
spokesman for the Department for Business, Innovation and Skills said:
‘These figures for repayments are estimates and based on a prediction of
economic circumstances some 35 years in the future.

'They will continue to fluctuate and do not present an immediate pressure on the system.’